Defence Secretary John Healey has warned that weaker economic forecasts will have "consequences" at the upcoming Budget on November 26. In a notable shift, he declined to repeat Labour's manifesto pledge not to raise income tax, national insurance or VAT.
Healey told Sky News's Sunday Morning With Trevor Phillips programme that the Office for Budget Responsibility now sees economic damage as «much more serious than previously thought, a combination of years of cuts, Covid and really slow economic growth over 14 years». He added: «So there are consequences. Things do change, and we'll have the announcements that are needed to deal with those challenges in the Budget.»
The Chancellor faces a fiscal gap potentially reaching £41 billion, according to reports. The OBR's downgraded productivity forecasts could add up to £21 billion in costs. Further pressure comes from sluggish growth, rising debt costs and government U-turns on spending commitments.
Multiple tax increases are reportedly under consideration. Chancellor Rachel Reeves is examining doubling council tax for top property bands, which could affect over a million households, particularly in London and the South East. Treasury officials have also been ordered to find ways to raise revenue from individuals earning over £46,000 annually, with those below £45,000 potentially defined as "working people" protected from tax rises.
Opposition warns of impact
Conservative Shadow Business Secretary Andrew Griffith accused Labour of planning to «further massacre the take-home pay of millions of hard-working middle earners». He claimed: «While boosting the pay of their union paymasters, Labour don't understand or care about those who get up and work hard to make a better life.»
Tory leader Kemi Badenoch warned that new council tax bands would «hammer people who have lived in the same house for decades, particularly pensioners, some of whom will be unable to pay this new tax and be forced out of their home». Reform UK leader Nigel Farage described the potential changes as «an assault on assets» that would «cause huge consternation amongst older people».
Prime Minister Keir Starmer told the House of Commons: «The Budget is on the 26th of November and we will lay out our plans but I can tell the House now we will build a stronger economy, we will cut NHS waiting lists and deliver a better future for our country.» He refused to rule out increases to income tax, national insurance or VAT, despite Labour's manifesto commitments.
Note: This article was created with Artificial Intelligence (AI).
